Sunday, August 19, 2007

US Ag Secty Defends Corn Ethanol

In a speech last month to the National Press Club in Washington, D.C., U.S. Ag Secretary Mike Johanns was asked "Corn-based ethanol may help the nation reduce its dependence on foreign oil, but critics say that ethanol costs almost as much as the energy it produces. Isn't corn-based ethanol a wasteful way to produce energy, and won't it increase the cost of food?"

His answer: "No and it isn't."

Johanns said that historically food prices will go up two to three percent each year based on inflationary pressures. Some years that hike may be a little more and in others a little less. This year the USDA expects food prices to rise from two to four percent, which Johanns termed “about average, maybe a little higher.” But those who claim the increase is due to ethanol and because the price of corn got high aren't looking at the whole picture.

“They leave out a whole big piece of the analysis ... the farmer doesn't get all of that. I'm sure they wish they did,” Johanns said. “But they actually get about 20 cents of the retail dollar. Actually the price of energy to ship that food can have as much or more of a profound impact on the price of that food than the corn you feed to the animal.”

Johanns further explained that the food chain is a complicated supply chain. “And if you have reached the conclusion that because food is up three percent this year, or four or two or whatever it is, and because it's because of ethanol...you're not telling the full story. And you are not telling an accurate story, in all due respect.”